Guardian Risk Management Pty Ltd v Protector Holdings Pty Ltd
[2011] WASC 240
•13 SEPTEMBER 2011
GUARDIAN RISK MANAGEMENT PTY LTD -v- PROTECTOR HOLDINGS PTY LTD [2011] WASC 240
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2011] WASC 240 | |
| Case No: | COR:91/2011 | 26 JULY 2011 | |
| Coram: | MASTER SANDERSON | 13/09/11 | |
| 5 | Judgment Part: | 1 of 1 | |
| Result: | No costs order made | ||
| B | |||
| PDF Version |
| Parties: | GUARDIAN RISK MANAGEMENT PTY LTD (ACN 009 439 516) PROTECTOR HOLDINGS PTY LTD |
Catchwords: | Costs Application for costs orders against solicitor and/or former director when statutory demand issued by deregistered company Turns on own facts |
Legislation: | Supreme Court (Corporations) (WA) Rules 2004, r 2.4A(3) Supreme Court Act 1935 (WA), s 37 |
Case References: | HPM Pty Ltd v Fear [2002] WASCA 249 Montevento Holdings Pty Ltd v Scaffidi Holdings Pty Ltd (No 2) [2010] WASC 180 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
PROTECTOR HOLDINGS PTY LTD
Non-party
Catchwords:
Costs - Application for costs orders against solicitor and/or former director when statutory demand issued by deregistered company - Turns on own facts
Legislation:
Supreme Court (Corporations) (WA) Rules 2004, r 2.4A(3)
Supreme Court Act 1935 (WA), s 37
Result:
No costs order made
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr M E Paterson
Non-party : Mr D P H Engelter
Solicitors:
Plaintiff : Michael Paterson & Associates
Non-party : Williams & Hughes
Case(s) referred to in judgment(s):
HPM Pty Ltd v Fear [2002] WASCA 249
Montevento Holdings Pty Ltd v Scaffidi Holdings Pty Ltd (No 2) [2010] WASC 180
(Page 3)
1 MASTER SANDERSON: The issue in this matter is costs. The question arises in unusual circumstances. On 11 May 2011 the plaintiff commenced proceedings against the defendant to set aside a statutory demand. It was subsequently ascertained by the plaintiff that as at the date the defendant served the statutory demand it was deregistered. Therefore the statutory demand was a nullity and the demand itself was of no force and effect. The parties agreed at the hearing of the matter I did not need to make any orders to dispose of the application. The plaintiff submitted I should make a costs order on an indemnity basis against the solicitors who purported to act for the defendant and/or against Gregory Paul Townsend who was a director of the defendant prior to it's deregistration. I invited all parties to make written submissions. That has now been done.
2 It is convenient to deal first with the application for costs against the solicitors who purported to act for the defendant. The plaintiff alleges the solicitors were negligent in failing to check the status of the defendant. By reference to Montevento Holdings Pty Ltd v Scaffidi Holdings Pty Ltd (No 2) [2010] WASC 180 it is submitted where a solicitor acts in proceedings without authority he or she may be answerable for costs occasioned by that conduct even if that was a result of an innocent mistake by the solicitors concerned. The plaintiff here, while accepting the actions of the solicitors may have involved an innocent mistake was such as to put the plaintiff to expense and accordingly the solicitors should be liable for the costs.
3 In opposition to that claim the solicitors say it is necessary to view the facts through the eyes of the solicitors at the time and not to judge with the benefit of hindsight: see Civil Procedure Western Australia [66.1.5.6]. The solicitors point out they acted for the company throughout 2010 when it was registered. They did not become aware of the subsequent deregistration. Further, there was no cause to conduct a company search for the defendant in the context of continuing instructions. When the solicitors did become aware the company was deregistered they advised the plaintiff's solicitors at the first opportunity.
4 The solicitors rely on two other matters to resist the application. First, the plaintiff made its purported application against the defendant without performing a company search. This they say was negligent and led directly to any costs being incurred by the plaintiff.
5 They also point out the plaintiff's application was brought out of time and had the defendant not been deregistered it was doomed to fail. In the
(Page 4)
- circumstances this issue was not argued by the parties but based upon the material available there is every prospect that argument would have succeeded. The solicitors say in the circumstances this should weigh against any order for costs.
6 I am satisfied no order for costs ought be made against the defendant's solicitors. I accept there was an innocent mistake. The solicitors acted to put the matter to rights as soon as they became aware of the mistake. It is difficult to know why the plaintiff's solicitors did not perform a search which would have disclosed the defendant was deregistered and would have avoided the necessity for these proceedings. For these reasons I am not satisfied costs should be awarded against the solicitors.
7 Turning then to Mr Townsend, he provides no explanation as to why he did not advise his solicitors the defendant was deregistered. He was a director of the company and if he was not aware it had been deregistered he should have been aware. He offers no explanation for his failure to act. The submissions filed by Mr Townsend concentrated on two matters. The first, when proceedings are a nullity, there is no power to award costs. Second, the application to set aside the statutory demand was doomed to failure because it was not brought within the required 21 days.
8 I will deal with each of these submissions in turn. There is no doubt under s 37 of the Supreme Court Act 1935 (WA) the court has a discretion to award costs against a party who is not a party to the proceedings: see HPM Pty Ltd v Fear [2002] WASCA 249. It is clear, however, the discretion ought be exercised with considerable care.
9 I would accept in this case proceedings have been issued when a search of the defendant company would have revealed it was deregistered and no application was necessary. I also accept it is relevant that proceedings to set aside the statutory demand would have failed.
10 Rule 2.4A(3) of the Supreme Court (Corporations) (WA) Rules2004 requires a plaintiff no earlier than seven days before the originating process is filed and no later than the day before the hearing of the application to carry out a search of the records of ASIC. Clearly no search was carried out before the application was filed. The application was supported by an affidavit of Michael David Allanson sworn 10 May 2011 and no search was annexed to that document. The matter was first returned on 26 May 2011 and prior to that return date no search was provided. Clearly there was a failure to comply with the rule.
(Page 5)
11 In all the circumstances I am satisfied this is a case where costs should lie where they fall. I am not satisfied any costs order ought be made either against the solicitors concerned or against Mr Townsend. The position would have been different had there been compliance with r 2.4A(3). But in the absence of that compliance it would seem to me that justice of the situation dictates no costs order should be made.
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